Let’s talk about the importance of properly documenting non-recurring losses on a Self-employed Borrower’s business tax return. These losses can be added back to the qualifying income if documented correctly.
Fannie Mae’s Form 1084 and Freddie Mac’s Form 91 both allow for this adjustment for self-employed individuals using various schedules such as Schedule C, IRS Form 1065, and IRS forms 1120 and 1120S.
To justify adding back a non-recurring loss, a CPA letter explaining the loss and supporting documentation will be required. On the other hand, any non-recurring income must be deducted from the Self-employed Borrower’s qualifying income calculation.
It’s important to pay attention to these details to ensure accurate reporting and compliance with regulations. Contact our office and we’ll connect you with a loan officer who specializes in working with self-employed borrowers and what it takes to qualify them for a mortgage loan.
Connect with one of our loan consultants to learn more.
